As soon as you discover “What is Forex Trading? “ Your next target is to study the different financial instruments that are used for this market. Among the many options for forex trading instruments, cryptocurrencies fall under the most controversial material for trading. This is because some traders recognize its threats more than the advantages. Today, we shall expose some of these dreaded beliefs regarding cryptos and we shall all try to figure out if the risks of using such trading material will outweigh its advantages.
5 Cryptocurrency Risks
1.Bitcoins are not reliable alternatives for banknote payments
Though cryptocurrency supporters predict that bitcoins will soon replace the traditional cash transactions in the market, several financial experts still believe that using these instruments for payments will never be practical and beneficial to us. In an explanation, experts elaborated that the slow and expensive transacting procedure makes it an almost unreliable payment. Bitcoins for example consume a 10-minute payment validation time and average fees require $20 per transaction.
2. Cryptocurrencies are tightly controlled by computer programs
The cryptocurrency industry has already won the hearts of many investors and traders due to its promising advantage despite adjustments. Even banks like Goldman Sachs and Morgan have already entered the bandwagon but you need to be careful when it comes to trusting cryptocurrencies because they might eventually vanish when it is no longer patronized by several traders.
3. Cryptocurrencies are unstable
As mentioned earlier, cryptocurrency’s existence depends upon the number of trust that is given by its patrons or owners. These instruments have very little possibility to dominate the physical market since investors would still prefer to use dollars rather than cryptos for their business transactions.
4. Limited Merchant Acceptance
As mentioned earlier, cryptocurrencies are unstable and because of this, only few merchants or establishments recognize the use of such instruments. This could be risky for someone who solely depends on cryptocurrency trading as a means of living because he may find it difficult or expensive to convert his profits into cash.
5. Cryptocurrencies are highly volatile
As per statistics, cryptocurrency has records of monthly percent change of rates in bitcoin that reaches about 90% in US dollar rate. With this value, we can derive that cryptocurrencies can behave erratically in the market and this behavior can bring anxiety to some traders as it will be difficult to create plans that will help create more profit.
Conclusion: Though we have exposed the disadvantages of utilizing cryptocurrencies as part of our discussion about “What is Forex Trading? “ Several companies, banks, and traders still opt to patronize such instruments because there are undeniably promising advantages behind these drawbacks. As observed, cryptocurrencies help build a modernized society. It may not necessarily become as famous as other financial instruments, but it surely triggers modification of finance and money. Digital tokens representing money and other assets have great chances to hasten the transfer of assets and payments even without third parties being involved.
